[mass transit] cards every year for all employees, training budgets, free beer, etc. In doing that, the idea is that we will reap greater rewards long-term as a company. So far, it’s worked out. I think that has driven so much of our growth: Focusing on quality externally and quality internally with our beer and our employees.
That seems to echo the Costco model that was implemented not too far from Fremont in Kirkland, Wash., though that’s built on a much broader base. Considering you came into this business with absolutely nothing, what made you prioritize high wages and employee benefits?
Lincecum: I think it’s important that, if you’re going to do the right thing, you don’t wait for the right moment. It’s not as if it’s more right then. It’s as right today as it will be tomorrow.
You have to set that mold from Day One. You bake it in as part of your company. For example, quality and consistency are our core watch words and we spend more each year on quality control. We have our own lab and three lab techs and continue to grow as we build out a new facility with a better lab, more lights and dials and buttons … that’s important. I think you just make it what you do.
As a consequence, we have one person who’s left us willingly in five and a half years. That’s a measure of people’s faith in what we’ve done so far and where we’re going as a company. There are plenty of employment options in Seattle now and there’s about 4% unemployment here. Most of the folks who work here are extremely qualified and left better-paying jobs — which they could probably go back to, quite honestly — but the values that we have, the work environment that we have here and the fact that we work in collaborative fashion has value.
How much do those benefits end up costing you as a percentage of your revenue and how has it increased in the past five years?
Lincecum: It’s exponentially more.
Just health-care costs are astounding and we’ve just added a ton of benefits. We just added a home mortgage assistance program. We spend more money on our benefits every year and we’ll spend exponentially more money the year after that and more the year after that. Again, our point is not to enrich a small amount of people but to have a company where people do something that they’re deeply passionate about, and we’re passionate about beer.
The rest of it is that this is not a company that’s in business to make a stupid amount of money and reward a small amount of people. Our mission is to make beer and treat each other well and, in so doing, we’ll all enriched by that. Some of it’s financial, some of it is satisfaction when you’ve done something that has meaning. For the right person, not for everybody, there can be an enormous amount of value in that. We’ve attracted an enormous amount of refugees from various professions from engineering to science and will continue to do so because that, clearly, means a lot to people.
I’d say that’s the hardest thing in growing your company and growing your brewery specifically: Keeping your focus on the beer. You can see how a lot of breweries go off the line. When you get so focused on meeting sales objectives and making fill-in-the-blank beer that has a ton of demand, you really lose sight of what that beer means to a loyal customer who’s gone out, worked hard all day, taken their earnings, gone to a store and buy our beer that represents the best we can do. It’s not about sales objectives and velocity sales in certain market channels and all those things you get drawn into.
Kim Jordan from New Belgium summed it up best recently when she was at a distributors conference and said we’re often talked about as products. We don’t make products, we make beer: That’s what we do. We aren’t suppliers: We make beer that makes us brewers, and our customers aren’t customers, they’re beer drinkers.
Do you feel that approach helps you compete for employees in a now-growing economy?
Lincecum: We’ve been drawing folks from all over the country.
We don’t have defined roles for everybody, so whenever there’s a job to do in the brewery, it’s on everybody — from changing the toilet paper in the bathroom to hopping on the canning line because we’re one person down and we have to put this delivery out by this afternoon. Everybody’s job overlaps with everybody else’s responsibility.
I hope everybody here feels that ownership of the company helps contribute to the hiring decision. Hires are made with the input of everyone at this company. It’s great that you’re qualified, but they actually have to approve of you being here because it’s their company, their culture and they own their workspace. It’s a ball that rolls down picking up momentum. You hire good people, you treat them the best you can and a little bit beyond, put them in charge of their work area, give them responsibilities, give them agency and hold them accountable and they’re going to make sure that everyone who sits or stands next to them is just as qualified, just as committed and just as accountable.
Is Fremont on a true employee-stock-ownership plan (ESOP) yet?
Lincecum: Not yet. We’re not really big enough to afford it and it’s a very expensive proposition, which is great. However, I’m actively researching and have been for the last year — I’m a recovering attorney — different ESOP models.
There are great ones here in Washington and there are some new ones out there. New Belgium is more on the traditional side and the owners of Left Hand Brewing just finished their ESOP. I’m chatting with them next week. One of the owners, the genius behind the ESOP, is coming out here.
I like the ESOP model a lot. It is not a guarantee that the company will maintain its position as a small, employee-focused craft beer company — witness Full Sail just selling out to an equity firm. One way or the other, it’s their brewery and their decision.
But in that example, and correct me if I’m wrong, the employees at least had some kind of vote on the matter and derived something out of the deal. It seemed their retirement plans got a big boost out of it.
Lincecum: Not just their retirement, but they sold their shares. The way it works is that you finance the ESOP, take that chunk of money, issue the stock and sell it to your employees. Your employees then own a share of the company.
I’m just interested in keeping this company, in whatever form it takes, primarily focused on being a brewery. I want to keep us focused on doing the best we can. Whether that’s expanding our hop farm — and we have six and a half acres right now — or our other programs.
You mentioned not wanting your beer to be known as a product, but you’re competing for shelf space and tap handles with companies that do just that on a global scale. How do you counter that?
Lincecum: I think the ace in the hole is us: It’s us holding this commitment true. I worked for 11 years as an environmental activist and community organizer around this country. I fundamentally believe that you make the reality that you want to live in.
We live those values here today. It doesn’t matter if we don’t have all this. We won’t be as big, we won’t have as many people, we won’t have the pay we have now or the scope of benefits. We still have the main reason we’re here, even if our business is cut in half.